EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0506111
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
RSP Australia applied for a TCO in respect of certain Rubber Matting on 20 May 2005.
Instrument
TCO No 0506111 was made on 21 October 2005. It declares that those certain Rubber Matting are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 10%. The rate of duty for the goods subject to the TCO is 0%.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0506111 is taken to have come into force on 20 May 2005.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Customs Act 1901 was enacted to facilitate and regulate the importation and exportation of goods in Australia. This Act, overseen by the Australian Parliament, was amended to introduce a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). The scheme aims to address the gap in tariff regulation by allowing the CEO to apply a lower rate of customs duty to certain goods specified in a TCO, provided that the application meets the core criteria outlined in the Act. This mechanism seeks to enhance trade by reducing the cost of imported goods, thereby supporting economic activity. Specifically, TCO No. 0506111 was introduced in 2005 to address the application by RSP Australia for tariff concessions on certain Rubber Matting, effectively reducing the duty rate from 10% to 0%. This particular TCO was effective from 20 May 2005, and no submissions were received against the application, ensuring the rights of importers were protected and no new liabilities were imposed.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) for specific goods, which then attract a lower rate of customs duty. The application process for a TCO requires the applicant to satisfy the CEO that the goods in question do not fall under the prohibited category outlined in section 269SJ of the Act. Once an application is deemed to meet the core criteria as set out in sections 269C, 269B, and 269D of the Act, the CEO is mandated to issue a written TCO. This instrument reduces the customs duty for the specified goods, as exemplified by Tariff Concession Instrument No. 0506111, which reduced the duty on certain rubber matting from 10% to 0%. The CEO is also required to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not proceed; however, in the case of TCO No. 0506111, no submissions were received. The TCO does not retroactively affect any pre-existing rights or impose liabilities on anyone except the Commonwealth, and it allows importers to apply for duty refunds for goods imported since the TCO’s effective date.
Key Provisions
The main operative sections of the Customs Act 1901, particularly section 269C, establish the framework for Tariff Concession Orders (TCOs), which allow for lower rates of customs duty on specified goods (s 269C). The key provision is that a TCO can be granted if the Chief Executive Officer (CEO) of Customs is satisfied that no substitutable goods are produced in Australia on the date the application is lodged (s 269C). This is determined by examining whether any Australian-produced goods could substitute the goods in question, considering their use or design (ss 269D, 269E, 269F). If the application meets these criteria, the CEO is required to issue a written TCO, specifying the applicable duty rate from the Customs Tariff Act 1995 (s 269P(3)).
Under this legislation, the CEO of Customs has specific obligations to follow when considering a TCO application. Firstly, the CEO must ensure that the application is not for goods specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO (s 269SJ). If the application is valid, the CEO must then determine whether it meets the core criteria set out in section 269C, which involves assessing whether substitutable goods are being produced in Australia (s 269C). If satisfied, the CEO must make a written TCO (s 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette as soon as practicable after accepting the application as valid, inviting any interested parties to lodge submissions if they believe the TCO should not be made (s 269K(1)).
Failure to comply with the requirements set out in the Customs Act 1901 can result in various legal consequences. While the Act does not explicitly state penalties for non-compliance with the TCO provisions, breaches of related customs laws can attract severe penalties. For instance, under section 246 of the Act, any person found guilty of an offence involving the importation of goods without paying the correct duty or providing false information can face a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, for individuals, and up to 50,000 penalty units or imprisonment for up to ten years, or both, for corporations. The TCO itself does not impose any liabilities on any person other than the Commonwealth, but it does affect the rights of importers by enabling them to apply for a refund of duty on goods imported since the TCO came into force (s 126(1)(r) of the Regulations).